Whether it’s your first mortgage or your fifth, we understand that purchasing a home can be an exciting, but stressful time. That’s why we have assembled a great team of experts to help you along the way. Our mortgage advisors, underwriters, transaction coordinators, and support staff are experienced professionals and experts in their field, and can walk you through the process. Want to know what to expect before you get started? We’ve compiled some great information to make the home buying process a little clearer. Still have questions? No problem, find your mortgage advisor here!
Pinnacle Capital Mortgage is a direct lender with local underwriters. We offer the following loan programs to serve the diverse needs of our clients.
Conventional loans are loans that are sold to Fannie Mae or Freddie Mac. These loan amounts go to $417,000 across the country and up to $625,500 in high cost areas. Conventional loans often represent the lower rates and great terms available in the market, as long as a borrower can meet the guidelines.
FHA and VA are the two largest types of mortgage loans that are backed by the federal government.
FHA loans are typically more useful for people with lower down payments and/or lower credit scores. They are the second most popular loan in the U.S. behind conventional conforming loans.
VA loans are made by the Veterans Administration for veterans of our armed forces. These loans come with special protections and benefits. VA loans don’t require a down payment in most cases and there is no monthly PMI.
Jumbo loans are simply loans that are too large to be considered purchasable by Fannie Mae or Freddie Mac.
They typically require 20%+ down (although there are exceptions for as little as 10% down), and the interest rates are usually about .25% – .50% higher than comparable non-jumbo loans.
No Cost Mortgage
A no cost (or “no point, no fee”) mortgage is the most common way to refinance in today’s market.
Here’s how it works. Every refinance transaction has real costs associated with it. These costs include title, escrow, credit report, notary, appraisal, etc. The question is: Who pays for these costs? The real answer is that the borrower always pays these costs, either directly at closing or through a slightly higher interest rate on their loan.
Let’s see an example:$300,000 Loan Amount
= All fees add up to $3,000
Rates for that day: 4.250% 4.25% APR (1.00) credit, 4.125% /4.166% APR (.500) credit , 4.000%/ 4.083%APR 0.00 <—”par” rate 3.875%/4.041%APR 1.00 Discount points
If the borrower chose the 4.000/4.083%APR par rate, then they would have to pay the $3,000 in closing fees. If they chose the 3.875/4.041%APR discounted rate, they would pay the $3,000 plus 1.00% of the loan amount in exchange for the below-market rate. If they didn’t want to pay points OR fees, then they would choose the 4.250%/ 4.25% APR rate, which would give them a 1.000% credit of $3,000 to offset the $3,000 in fees.
A great place to start is a free, no-obligation consultation. We’ll be able to tell you in a few minutes which choices might work great for you. We can also quickly pre-approve you free of charge. To schedule your consultation, call us today for immediate assistance.
This is the first step that gives your advisor the information they need to help pick a great loan program for your needs and goals. It is vitally important that this information is accurate to prevent the loan from being denied later in the process.
This will take 24 hours for conventional loans and slightly longer for alternative loan products. If you are buying a home, this will be provided to your Realtor for better leverage in negotiating price.
This step is extremely important and often is the one step that can hold up a loan. Please sign and date and then send disclosures back if you have not already, and include any documentation that your transaction coordinator or advisor have requested. Please be sure to include all pages of your bank statements and a full 30 days of pay stubs.
This will be ordered by a member of our team after your home inspection is completed and approved if this is a purchase transaction. This generally takes five to seven days and may be longer (or shorter), depending on volume.
The Title Report
This was ordered earlier by the listing agent in a purchase transaction or by your advisor for a refinance and should have been received by now. It will show if there are liens or other problems with the property that may delay or prevent closing.
At this point all the information collected is organized and sent to an underwriter for approval. Depending on the volume, product type, and lender this may take as little as 24 to 72 hours.
The underwriter will send an approval which usually includes some conditions. These may be “prior to doc” or “prior to closing.” It is very important that any of these requiring action or documentation be taken care of immediately. Any delay will cause a delay in signing. These are then sent to the underwriter for final review and approval. This generally takes 24 to 72 hours.
When everything is approved by the underwriter, docs can be ordered. These are the papers you will sign to close and fund your loan. These take 24 to 48 hours to be completed. They are then sent to the title company.
When the title company has worked their magic with the numbers they will call and set up an appointment for you to sign. This usually takes about 24 hours after they receive the docs. These are then sent to the lender.
The Funding And Recording
All the signatures and closing conditions are checked and the loan approved for funding and recording. This will usually be 24 to 48 hours after signing. On rare occasion, additional signatures or conditions may need to be met and could cause a delay.
Additional Items Needed
To speed up the process of closing your loan, please provide the following documents as soon as possible:
- Last two years W2’s and/or 1099’s
- Last two years Federal Tax Returns (1040’s), all pages
- 30 days worth of pay stubs, including pension or retirement income
- Most recent month’s checking/savings account statement, all pages required
- Most recent statement for any IRA’s, 401K’s or stock accounts, all pages
- Copy of Driver’s License (front and back) and copy of Social Security Card
- Name & phone number of homeowner’s insurance agent
- Name and phone number of current &/or previous landlord
- Copy of Rental Agreement(s) and property tax statement(s) for any rental properties owned
- Copy of Social Security and/or pension award letters
- Student loan repayment terms if they are in deferment
- Signed and Recorded copy of Divorce Decree/Child Support Order (12 months bank statements if receiving support)
- Complete copy of bankruptcy papers (including all discharge papers)
- Last two years corporate and/or partnership tax returns: 1065’s, 1120’s, K-1’s
- Current Profit and Loss statement and balance sheet
During The Home Buying Process
- Stay current on existing accounts
- Contact your mortgage advisor with any questions
- Change jobs, become self-employed or quit your job
- Buy a car, truck or van (or you may be living in it)
- Use credit cards excessively or let current accounts fall behind
- Spend money you have set aside for closing
- Omit debts or liabilities from your loan application
- Buy furniture
- Originate any inquiries into your credit
- Make large cash deposits without checking with your mortgage advisor
- Change bank accounts
- Co-sign a loan for anyone
Adjustable Rate Mortgage
A mortgage loan were the interest rate adjusts periodically based on the changes of a specified index such as the one-year Treasury Bill or the LIBOR.
The calculation of the amount of the installment payment it takes to pay off the obligation at the end of a fixed period of time.
Annual Percentage Rate (APR)
The total cost of a mortgage stated as a yearly rate. It is typically higher than the note rate because it includes the base interest rate plus specific closing costs.
A professional report that estimates the market value of a property.
The value a tax authority places on real property for the purpose of assessing yearly property taxes.
A mortgage that is amortized over a stated period but provides for a lump-sum payment due at an earlier period, e.g. 30-year due in 15, where the payments are based on 30-year repayment but the loan is due paid in full in 15 years.
Limits how much the interest rate on an adjustable rate mortgage (ARM) can increase or decrease.
Cash to Close
Liquid assets available to be used to pay the closing costs involved with a mortgage transaction.
Property pledged as security for a loan, such as property pledged as security for a mortgage.
A mortgage not obtained under a government-insured program.
A legal document that is recorded in the county conveying title to a property.
Deed of Trust
The legal document that pledges the property for the security of a mortgage loan.
Failure to make mortgage payments in a timely manner or to comply with other requirements outlined in the note.
Earnest Money Agreement (Sales Contract)
The written agreement between the buyer and seller of a property, which stipulates the amount of the purchase, closing date and any repairs or other conditions that must be met before the transaction (purchase) is completed.
A right of way given to persons other than the owner for access to or over their property.
The portion of a property’s value over and above the amount owed against it.
A disinterested third party that handles legal documents and funds on behalf of the seller and buyer.
A real estate loan that has priority over any other subsequently recorded mortgages.
Fixed Interest Rates
An interest rate which does not change during the term of the loan.
A legal procedure in which the mortgage loan is in default and the property taken from the borrower and sold by the lender to pay off the loan against the property.
A written letter signed by the individual giving funds for the purpose of buying a home which states there is no obligation to repay the sum of money being given.
Income Total monthly income earned before taxes or other deductions.
Also referred to as homeowners or fire insurance; coverage for physical damage to a property from fire, wind, vandalism or other hazards.
Home Equity Line of Credit (HELOC)
Also referred to as a revolving line of credit; usually a second mortgage, which allows the borrower to obtain multiple advances up to a specific credit limit.
Generally a published number or percentage, such as the yield on the One-Year Treasury Bill, which is used to compute the interest rate for an adjustable rate mortgage.
A loan that exceeds the Fannie Mae legislated mortgage amount, which is currently $333,700. Jumbos are also called non-conforming loans.
Describes the location of the property which has been recorded at the county.
A legal claim or attachment against property as security for a loan.
The ratio between the amount of any mortgages against a property divided by the sales price or appraised value.
Usually the amount of principal, interest, taxes and insurance paid each month on a mortgage loan.
The conveyance of an interest in real property given as security for the repayment of a loan.
A fee paid to the lender for processing a loan application. The origination fee is stated in the form of points. One point equals one percent of the mortgage amount.
A cash amount a borrower must have left over after making a down payment and paying the closing costs for the purchase of a home.
Private Mortgage Insurance (PMI)
Insurance written by a private company to protect the lender against loss resulting from nonpayment or default.
Purchase Contract (Earnest Money Agreement/Offer)
A written agreement between a buyer and seller of real property, setting forth the price and terms of the sale, also known as a sales contract.
Calculations that are used in determining whether a borrower can qualify for a mortgage. The two calculations are housing expense divided by gross income, and the total debt including other monthly debt payments divided by gross income.
A commitment issued by a lender to a borrower guaranteeing a specific interest rate for a specific period of time.
Provides insurance that public records have been examined to insure that there are no liens or other claims against the property.
Truth in Lending Act
A federal law that requires lenders to fully disclose the terms and conditions of a mortgage including the Annual Percentage Rate (APR) and other charges.
The process of evaluating a loan application to determine credit worthiness and risk involved for the lender.
A loan that is guaranteed by the U.S. Department of Veterans Affairs, also known as a government loan.